THE BOARD of Investments (BoI) — the government’s lead investment promotion agency — saw total value of projects approved drop in February, which one official attributed to high base effects and one economist blamed on “spillover effects” of fast inflation, government moves to change the fiscal incentives system and a generally trying global economic environment.
Preliminary BoI data showed total project cost dropping 95.21% to P3.848 billion in February from P80.309 billion a year ago, with foreign projects nearly halved to P340.33 million from P669.2 million and local ones falling by 95.6% to P3.508 million from P79.64 million.
Total number of projects was halved to 15 from 34, with projected employment down 61.89% to 1,561 jobs from 4,096.
Projects approved last month were led by the Allied Care Experts Medical Center’s P970-million new general hospital in Tacloban City; Pueblo de Oro Development Corp.’s P835.62-million expansion of its low-housing project in San Fernando, Pampanga; Asian Alcohol Corp.’s P824.82-million bioethanol production project in Negros Occidental; Megaworld Corp.’s P338.18-million tourist accommodation, Hotel Lucky Chinatown, in Binondo, Manila; and Cebu Landmasters, Inc.’s P323.18-million low-cost housing project in Cagayan de Oro City.
BoI-approved projects dropped 22.71% to P101.718 billion in this year’s first two months from P131.611 billion a year ago, with local projects down a third to P90.791 billion from P130.909 billion but foreign projects growing more than 15-fold to P10.927 billion from just P702.28 million.
Trade and Industry Secretary Ramon M. Lopez, BoI chairman, said the decline was due to a “timing issue”, as some projects failed to make the monthly cut and were instead credited to March, and high base effects from last year.
He downplayed February’s drop saying: “Ang mahirap kapag, kunyare, four months ka na in a decline — ’yun ang may problema (What will be worrisome would be, for instance, four straight months of decline — that would be a problem).”
In a press release, Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo explained that “We have key projects in the pipeline, particularly in the area of power, that are still undergoing BoI’s rigorous evaluation process on technical and financial aspects; and equally important, on their compliance with requirements for BoI registration.”
“Given the projected investment costs, we are very optimistic of a renewed surge in total approvals in the next months,” he added.
“We remain optimistic of meeting the P1-trillion target set by our chairman… Secretary Ramon Lopez, for BoI this year. It is a timing issue as we cannot and we do not rush project approvals. The BoI makes sure that every peso of approved investments is qualified and is deserving to be registered.”
Sought for comment, Michael L. Ricafort, head of Rizal Commercial Banking Corp.’s Economics & Industry Research Division, said in an interview that the decline may have been caused by spillover effects of last year’s high inflation and interest rates “as investors may wait for borrowing/financing costs to go down further before aggressively borrowing again to finance new investments and expansion projects in able to further save on costs.” Other factors included uncertainty from government moves to change investors’ fiscal incentives and muted global economic prospects due to the Sino-US trade war, among others. — Janina C. Lim